Best columns: Business

Favoring mines and factories

Paul Krugman

The New York Times

Coal miners aren’t the only ones suffering from economic change, said Paul Krugman. Amid President Trump’s loud promises to bring back mining and manufacturing jobs, he’s all but ignored huge job losses in the retail sector. Macy’s, for example, will close 68 stores and lay off 10,000 workers this year. Sears, “another iconic institution,” recently warned investors that it might not be able to stay in business. “Overall, department stores employ a third fewer people now than they did in 2001. That’s half a million traditional jobs gone—about 18 times as many jobs as were lost in coal mining over the same period.” Those laid-off retail workers “are just as much victims of economic change as laid-off coal miners.” So why don’t they attract the same kind of political posturing? One argument is that mines and factories act as anchors for their local communities, so it’s more painful when they close. But that’s “not the whole truth.” Shuttered mines and factories offer ready-made villains for demagogues who can blame job losses on liberal environmentalists or foreigners. “By contrast, it’s really hard to blame either liberals or foreigners for, say, the decline of Sears.” I’m not unsympathetic to unemployed industrial workers. “Their jobs matter. But all jobs matter.”

Tesla is a bubble

Holman Jenkins Jr.

The Wall Street Journal

Electric-car maker Tesla recently surged past Ford and GM to become the most valuable American auto company, with a market cap of almost $52 billion, said Holman Jenkins Jr. To many, that valuation seems “crazy,” since Tesla sold 80,000 cars last year to GM’s 10 million. But investors bullish on Tesla are betting on the company’s charismatic founder, Elon Musk, “not the car business.” They remain enamored of Musk and his vision for a future of self-driving electric vehicles, even though there’s little hard evidence to justify their enthusiasm. The consultancy Navigant Research recently found that Silicon Valley companies like Tesla and Google are actually lagging behind traditional automakers in the race to build an autonomous car. Could that be because Detroit actually builds and sells automobiles, “while the Silicon Valleyites have been mostly engaged in brand-building exercises based on public fascination with jazzy, futuristic auto technology”? Even if Tesla succeeds in its plan to ramp up annual production to 500,000 electric vehicles over the next two years, it will only sell “a quarter as many luxury cars as BMW does, and has yet to show it can do so profitably.” Even then, it will be selling cars in a crowded, competitive market. Musk’s cheerleaders should beware. “The car business just doesn’t generate the kinds of returns Tesla investors are anticipating.” ■